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Pension Reform and Macroeconomic Stability in Latin America

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  • Jorge Roldos
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    Abstract

    This paper reviews macroeconomic aspects of pension reforms in Latin America, focusing on financial market stability and fiscal sustainability. Concentration of pension fund portfolios in government bonds remains high, and the lack of new investment alternatives has distorted asset prices. Countries have gradually liberalized investments abroad, but remain wary of the impact on foreign currency markets. The fiscal costs of the transition to funded systems have been higher than expected, and have contributed to high debt levels. The paper highlights the importance of coordinating changes in portfolio limits with debt management policies and measures to develop securities markets.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/108.

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    Length: 32
    Date of creation: 01 May 2007
    Date of revision:
    Handle: RePEc:imf:imfwpa:07/108

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    Related research

    Keywords: Pension funds; Latin America; Debt management; pension; bonds; pension reform; pension fund; pension reforms; bond; government bonds; retirement; pension systems; pensions; corporate bonds; pension system; indexed bonds; implicit pension debt; pension fund administrators; mutual funds; pension debt; bond markets; pension fund investment; financial stability; financial markets; financial institutions; private pension; replacement rates; local bond; stock market; individual accounts; minimum pensions; corporate bond; financial market; unfunded pension; replacement rate; asset management; minimum pension; risk management; retirement age; pension funds ? investments; financial market development; pension costs; unfunded pension liabilities; equity market; pension liabilities; equity markets; funded systems; pension programs; hedge; pensioners; pension funds investment; government bond; private pension funds; pension fund assets; gross returns; cash flow; local bonds; local bond markets; hedging; asset managers; payroll tax; financial economics; net returns; occupational pension; retirement accounts; retirement products; pillar systems; par ? bonds; hedge ratios; cash flow deficits; lower pensions; bond financing; portfolio choices; financial intermediaries; pension fund reform; early retirement; mortgage bonds; pillar pension; retirement ages; pension fund companies; denominated bonds; labor force; domestic capital; derivatives markets; labor force participation; contribution rates; domestic government bond; government bond markets; pension fund managers; government cash flow; pension funds investments; retirement systems; financial sector development; individual retirement accounts; local stock market; portfolio choice; individual retirement; bond yield curve; pension contributions; infrastructure bonds; private asset managers; bond market; domestic capital markets; lower pension; stock market development; private pension fund; annual returns; bond issuance; contributory pensions; portfolio investment; government bond market; pension fund investments; cash flow deficit; par bonds; bond prices; currency risk; financial sector; retirement security; sovereign bond; financial innovation; corporate bond issuance; multi-pillar systems; currency hedge; pension plans; retirement income; inflation risk; pension fund portfolios; contributory pension; bond yield; mutual fund; share of government bonds; portfolio management;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Pietro Masci & Carolin A. Crabbe & Guillermo Larraín Ríos & Agustín Vidal-Aragón de Olives & The Principal Financial Group & Alberto Arenas de Mesa & Kenroy Dowers & Lawrence H. Thompson & Rafael , . "A Quarter Century of Pension Reform in Latin America and the Caribbean: Lessons Learned and Next Steps," IDB Publications 41658, Inter-American Development Bank.
    2. Salvador Valdés & Peter Diamond, . "Social Security Reforms in Chile," Documentos de Trabajo 161, Instituto de Economia. Pontificia Universidad Católica de Chile..
    3. Catalan, Mario & Impavido, Gregorio & Musalem, Alberto R., 2000. "Contractual savings or stock market development - Which leads?," Policy Research Working Paper Series 2421, The World Bank.
    4. Marianne Baxter & Robert G. King, 2001. "The Role of International Investment in a Privatized Social Security System," NBER Chapters, in: Risk Aspects of Investment-Based Social Security Reform, pages 371-438 National Bureau of Economic Research, Inc.
    5. Srinivas, P.S. & Whitehouse, Edward & Yermo, Juan, 2000. "Regulating private pension funds’ structure, performance and investments: cross-country evidence," MPRA Paper 14753, University Library of Munich, Germany.
    6. Indermit S. Gill & Truman Packard & Juan Yermo, 2005. "Keeping the Promise of Social Security in Latin America," World Bank Publications, The World Bank, number 7391, October.
    7. Holzmann, Robert, 1998. "Financing the transition to multipillar," Social Protection Discussion Papers 20052, The World Bank.
    8. Schmidt-Hebbel, K., 1995. "Columbia's Pension Reform. Fiscal and Macroeconomic Effects," World Bank - Discussion Papers 314, World Bank.
    9. Hernando Vargas H. & Rocío Betancourt, 2006. "Pension Fund Managers Behavior In The Foreign Exchange Market," BORRADORES DE ECONOMIA 003317, BANCO DE LA REPÚBLICA.
    10. N. A. Barr, 2002. "The Pension Puzzle," IMF Economic Issues 29, International Monetary Fund.
    11. Eduardo Walker & Fernando Lefort, 2002. "Pension Reform And Capital Markets: Are There Any (Hard) Links?," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 5(2), pages 77-149.
    12. Indermit S. Gill & Truman G. Packard & Juan Yermo, . "Keeping the Promise of Social Security in Latin America," IDB Publications 59998, Inter-American Development Bank.
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    Cited by:
    1. Dayoub, Mariam & Lasagabaster, Esperanza, 2008. "General trends in competition policy and investment regulation in mandatory defined contribution markets in Latin America," Policy Research Working Paper Series 4720, The World Bank.
    2. Ramon Moreno & Marjorie Santos, 2008. "Pension systems in EMEs: implications for capital flows and financial markets," BIS Papers chapters, in: Bank for International Settlements (ed.), Financial globalisation and emerging market capital flows, volume 44, pages 45-69 Bank for International Settlements.
    3. Tao Sun & L. Effie Psalida, 2009. "Spillovers to Emerging Equity Markets," IMF Working Papers 09/111, International Monetary Fund.

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